Which Stocks Look Ready to Pop and Drop with Earnings Next Week?

Indie Research

Stocks tend to be most volatile around earnings season, when a good or bad report can make or break it. However, a good or even great earnings report doesn't necessarily translate into a huge pop for a stock.

During earnings season, BullMarket.com publishes a comprehensive 25- to 40-page Earnings Preview report for the week ahead each Friday.

In its latest earnings preview, BullMarket.com looks at several popular stocks, including NetFlix (NFLX), Deckers Outdoor (DECK), Apple (AAPL), Visa (NYSE:V), Qualcomm (QCOM), Facebook (FB), F5 Networks (FFIV), Starbucks (SBUX), and Amazon.com (AMZN).

Here is just a tiny sample of what BullMarket.com wrote about Visa:

Visa has beaten analyst EPS estimates each quarter over the past two years. Over that stretch, the stock has risen the next session five of eight quarters. Seasonally, the stock has risen twice in the last four years.

Last quarter,Visa's Q1 profit declined by -1.7% to $1.27 billion, or $1.92 per share, from $1.29 billion, or $1.91 per share, a year earlier. Its operating revenue grew by 14.7% to $2.96 billion, fueled by an 8.8% increase in payments volume to $1.03 billion on a constant-currency basis.

Operating margin for the quarter was 63%, which was slightly ahead of Visa's full-year guidance of about 60%.

Wall Street was expecting the world's largest payment processor's EPS to slip to $1.81 per share on $2.85 billion in revenue.

Visa said its payments growth was driven by sustained growth in all of its regions, including the U.S., which saw some incremental benefit from starting to lap the implementation of the Durbin rules last year.

Global cross-border volume grew by 10% on a constant-dollar basis in Q1, which compares to an 11% rate in the first quarter. The U.S. grew 9%, and the rest of world 11%. Through April 28th, cross-border volume on a constant-dollar basis grew 10%, with a U.S. growth rate of 7% and the rest of world at 12%.

Transactions processed over Visa's network totaled 13.9 billion in the fiscal second quarter, a 6% increase over the prior-year period. The U.S. saw a 3% increase in transactions, while the rest of world delivered 21% growth. ...

Outside of earnings, Visa continues to ride the strong secular trend of the global economy shifting away from cash and checks towards electronic payments, and it has performed well even in a middling economy. The company has benefited to a degree from a lack of direct exposure to the weaker European economies, but that could change if Visa Europe exercises its put option. If it does, Visa has no choice but to negotiate a deal; but overall we view Visa operating as one company as a plus.

We like the new partnerships and innovations the company has been implementing and think that deals like the one with JPMorgan are a win-win for everyone involved. The innovative Chase Merchant Services could help Visa gain share and become a model for other issuers. ...

The full BullMarket.com earnings analysis includes a look at historical earnings data and EPS trends for the companies above and more; examines past investor reactions to earnings in various contexts; gives options activity analysis; reviews previous-quarter earnings; and gives an opinion on both what earnings will look like and how investors will react based on the aforementioned data points.

Just a few of the correct calls BullMarket.com made for Q2 so far were:

  • to expect a negative reaction to Google's (GOOG) results.
  • to expect a negative reaction to Coca-Cola's (KO) results.
  • to expect a negative reaction to Intel's (INTC) results.
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